Yahoo Finance British American Tobacco vaping target goes up in smoke
Cigarette titan British American Tobacco has cut full-year vaping targets while warning currency movements will hit profit growth by around 7pc.
BAT, the largest listed tobacco company in the world, said on Tuesday that it would miss a revenue goal of £1bn from e-cigarettes and tobacco heating products. Problems in Japan and the US prompted it to lower its guidance to £900m.
The announcement, made as incoming chief executive Jack Bowles was paraded in front of analysts in London, came as a fresh blow to the maker of Camel and Dunhill, which has seen around a third of its market value wiped away so far this year.
But finance chief Ben Stevens told The Telegraph: "The headline is high double-digit growth."
Mr Bowles will transition into BAT’s top job from November, replacing Nicandro Durante who stepped down in September after eight years at the helm. Mr Durante had been subject to criticism as shares slipped amid a period of unprecedented change.
Mr Durante, who will then formally retire on April 1 next year said the company remained “on track for a strong performance” this year.
Jefferies analyst Owen Bennett said the negatives in the announcement, including the reduction in vaping targets, "were already expected".
Tobacco companies are racing to grow so-called reduced risk products such as e-cigarettes or heated tobacco; but are subject to the existential threat posed by fast-growing vape-only brands such as Juul - which is particularly dominant in the US.
Mr Stevens said heated products in Japan hasn’t grown as the company had expected, adding: “We continue to think that market will grow, it is just a little less quickly than we thought.”
As the world’s biggest vaping market, the US is a key battleground. San Francisco-based Juul has around two-thirds of the market, though analysts have warned a youth advertising crackdown by the Food and Drug Administration (FDA) could pose a threat and open the door for traditional tobacco companies to regain lost ground.
Mr Bowles said: “The FDA taking a strictly view of youth access to vaping products - that’s very good news for us. We would love the FDA to bring every player in the US market up to the high standards that we have in terms of restricting youth access.
“We know that Juul has grown very quickly in the last year… We are not afraid of competition at all."
He continued: “As far as competitors go, bring it on. We are very happy to compete in any market, but we do like to see a level playing field.”
